The Indian economy is slated to make a growth of 6.4 % in 2016 in lieu of the increased investments and exports arising due to the introduction of the concept of ‘Make in India’. However, no matter how lucrative the economy looks right now, investing money in any of the asset classes should be made only after careful consideration of various parameters. Here are some pointers to guide you in investment:
a.) Purpose of Investment: The purpose of investment can be different for each investor. The various purposes are safety, growth and income. A good investment planning option will be safe as well as offer you growth and income at the same time. If you are 55 or older, it will always be advised to first draw out a retirement plan based on which you can decide on different kinds of investment plans.
b.) Time Frame for Investment: Investments can be short term (1-2 years), midterm (3-9 years) or long term (10+ years). If you are opting for short term plans and need the money within couple of years then it is smarter to opt for investment plans that will offer you maximum safety for your money. In the case of midterm plans, you can aim for options that offer income options like balanced funds. Balanced funds work well even with small principal amounts and offer a good growth in 3-9 years. For long term plans, one can opt for index funds that offer a vast potential for the growth of money over time.
c.) Risk Level Acceptability: All investing options entail some degree of risk and the level of risk you as an investor are ready to accept will narrow down your options. Investment plans that offer maximum potential are usually the ones that have higher risk. So, before you choose any plans understand completely the different risks like loss of money (reduction in the principal amount) or undervalue rate of returns. Each plan is different and so is the risk of investing in them.
d.) How Much and How often to Invest: The investment plan you choose will also depend on the money you have in hand. You can invest your money as a lump sum or even in smaller amounts over the months. There are various online investment plans that offer versatile payment options. Mutual funds and SIPs are popular options that let you start investing even with small amounts of money or option like PPF that give you security and growth over the years. For investing lump sum, there is an array of options like dividend income, income for interest etc.
Some Investment Choices in India:
1.) Fixed Deposits: Fixed deposits are a great choice for those seeking high safety investment options. However, the returns that FDs offer are a rather less comparatively. However, the risks in it are very less.
2.) Real Estate: The open path for foreign investments in India in 2016 is predicted to bring about a vast growth in the real estate sector. 2016 looks like a favorable year to invest in especially in the housing sector as housing is still a growing need in India. Real estate is a popular investment option among Indians as it is safe as well offers growth and income.
3.) Mutual Funds: Keeping in mind the current economic scenario, mutual funds looks like a profitable long term investment venture. It allows flexibility in terms of the investment amount and payment period.
4.) PPFs: Public Provident Fund is another popular long term investment option as it offers safety as well as a good yield through interest rate. The amounts are flexible and the returns are exempted from tax.
5.) Insurance: Life insurance may not offer a high growth in terms of the principal amount but is also a viable investment option. It is a good plan for those who are 55 years and above of age as the insurance will act as a cushion when sudden expenses come up due to poor health or any other reason.
Investing your money in the right plan will help you keep your money safe and also yield a good return. Keep these pointers in mind to choose the right investment plan for you.
Excellent guide! Your tips are really useful for investment planning. Thanks you for sharing this useful information.